Concerns about the stagnation of the Eurozone is forcing global Investors in search of a better return to move into U.S. Treasuries pushing the 10-year Treasury note price up 6/32 today and lowered its yield to 2.370%, while the 30-year bond is up 15/32 to yield 3.128%, a shade above its 2014 low.

In Europe, yields on 10-year Italian (2.346%) and Spanish bonds (2.088%) set new lows and once again trade below comparable Treasury yields, which is pretty extraordinary given the respective states of their economies.

Todays Other Top Stories

Learn Bonds

LearnBonds: – How many bonds should you own?– Bond investors who opt to look at single issues as opposed to pooled products like ETFs, CEFs, and open-ended bond funds, have a variety of choices to make: how much credit risk to take, what kind of blended duration to employ, and yes, how many total bonds to carry in the portfolio. While fund managers are paid to make those decisions, the do-it-yourself, individual investor needs to take charge of matters on their own.

Bloomberg: – Cumberland’s Kotok likes stocks, ‘overlooked’ muni’s (audio). – David Kotok, co-founder and chief investment officer at Cumberland Advisors, says deepening weakness in the euro area economy will boost the U.S. dollar which in turn will be good for U.S. stocks and for “spread products” in the U.S. fixed-income market.

Theme Report: – Fed claim municipal bonds aren’t liquid.– In what could be a major blow to banks, and underwriters the Federal Deposit Insurance Company is reviewing a new rule that would make municipal bonds not qualify as a liquid investment. This would be a reversal of over 100 years of the way tax free bonds have been held by banks.

Bond Market

LPL Financial: – Bond yields around a first rate hike.– Historically, bond yields have begun to move more forcefully four to six months ahead of a first rate hike from the Fed. We believe the rise in interest rates may begin sooner this cycle due to lower yields and more expensive valuations. We favor capitalizing on year-to-date bond strength and recommend a defensive posture consisting of short to intermediate bonds.

Treasury Bonds

Bloomberg: – U.S. Treasuries advance on value versus G-7 peers.– Treasuries advanced, pushing 10-year yields to the lowest level in almost a week, as the collapse of yields in Europe prompted investors to reach for higher-yielding U.S. government bonds.

FT: – Why EM asset managers are on a hair trigger for selling.– (Subscription required) Hyun Song Shin, head of research at the Bank for International Settlements, has been sounding alarm bells over the debt issued by emerging market corporates since last year. His latest research, presented to the BIS AGM last month, explains how investors’ hunger for yield has put them on a hair trigger for selling should anything go wrong.

Investment Strategy

ValueWalk: – The case for active bond management.– There have been instances where the passive approach to bond investing produced significant underperformance relative to a benchmark. Index funds are at a significant disadvantage to active portfolios in which managers incorporate valuation into their decision making process. The many nuances and inefficiencies of the fixed income market create both difficulties for indexing and opportunities for active management.

ETF.com: – Looking toward Non U.S. bonds. – While the suite of non-U.S. ETFs is not as robust as on the U.S. side, there are numerous differentiated funds available to use in building a diversified fixed-income portfolio.

Financial Post: – Investors should keep favouring stocks over bonds.– The end to ultra-loose monetary policy around the world is a potential headwind for both stocks and bonds, but investors should continue to hold more of the former than the latter, says Citigroup Global Markets.